Craigslist Rival OfferUp Wants To Capitalize On Car-Crazy Consumers

OfferUp CEO Nick Huzar is launching a new subscription for auto dealers.OfferUp

OfferUp already took aim at Craigslist and eBay. Now it’s targeting another business: car sales. On Tuesday, OfferUp is launching a new Autos division, which will help dealers set up verified pages and easily sync their inventory. Cars and trucks has been one of the top three categories on the mobile shopping app for years, said OfferUp CEO and founder Nick Huzar. Turning customers’ obsession with cars into its own business line is just capitalizing on the growth that’s occurred organically, he says.

“Autos is something that we just feel blessed happened on the platform,” Huzar told Forbes. “We’re trying to catch up in many ways to build a robust offering that adds a lot of value.”

For the last seven years, Huzar and his Seattle-based company have been focused on building a mobile marketplace to challenge Craigslist’s hold on the market. OfferUp’s app makes it easy to snap a photo of an item and offer it up for sale. Buyers scroll through a seemingly endless, Pinterest-style feed to find the items they want and then can message the sellers directly through the app. And unlike Craigslist, there’s a rating system on the end for both buyers and sellers, designed to make buying and selling things through the internet a little less scary.

While Craigslist and eBay might be the incumbents, OfferUp has made some inroads. Today the company claims that 43 million unique people used its app in the last year and it’s been downloaded over 60 million times. It’s currently the number four shopping app in the Apple App Store, ahead of Groupon, eBay, and rival startup LetGo. OfferUp’s early success and high engagement— the company claims people use its app three times a day, every other day (an admittedly weird metric)—also attracted the attention of Silicon Valley venture capitalists, who have invested over $220 million in the shopping app, most recently valued at $1.2 billion.

Now seven years in, OfferUp is looking for new ways to make money and turn the company’s growth into profits. The company doesn’t charge anything to buy or sell products on OfferUp. Instead, most of its business comes from people buying promoted posts, like ads, and a new shipping option, in which OfferUp takes a small cut.

That’s where the new OfferUp Autos comes in to turn car dealers into power sellers with a new monthly subscription. While OfferUp is often used like a local version of Craigslist, with everything from furniture to ski goggles being listed for sale, it started also attracting big ticket items like cars.

Consumers are already moving more of the car-buying process online, said Michelle Krebs, a director of automotive relations at Cox Automotive, which owns brands like Autotrader and Kelley Blue Book. “They want to do as much of the transactional part online,” she said. “The test drive is one of the areas where they want to go the dealership and spend more time.”

Huzar noticed that more than half the cars marked sold on OfferUp were coming from dealers or power users that were selling more than four cars a month. The sales process seemed quick too: Huzar says, of the cars that sell, 30% sell within two days and over 50% sell in a week.

To help dealers reach more people, OfferUp will start selling subscriptions for advanced features like inventory management, an official verified dealer page and automatic postings, optimized for when the most buyers are online in a day. If a car gets marked as sold, OfferUp’s software can automatically replace it with another car in their inventory. Dealers will also get better ways to chat with customers, including easy ways to call and unlimited pictures in chat so they can show off all angles of a car.

Just how many dealers will pay extra is an unknown. Today, OfferUp claims nearly 10% of used car sales in the US, over 3 million sales, happened on its app in the last year. The company says it’s confident in its methodology, but some industry experts were quietly skeptical of the company’s claims when asked by Forbes. Car buyers still have to do the paperwork signing and buy the car directly from the independent sellers or the dealerships, so OfferUp doesn’t track the sales through its own platform. Instead, the company measures a sale by whether or not a buyer has chatted with a seller before the seller marks it as sold. It claims some dealers work exclusively on the OfferUp platform, but many dealers advertise their cars on many platforms from Facebook to Craigslist to Edmunds, so it’s possible that sales OfferUp is claiming were driven by other platforms instead.

Whether OfferUp will be able to squeeze money out of the crowded car marketplace remains to be seen. Other online marketplaces, like Facebook Marketplace, have partnered with auto dealers directly. Plus there’s the incumbent players ranging from Autotrader to Carvana, which sells cars out of vending machines, vying for customers. Huzar wouldn’t comment directly on the competition, but he thinks his company’s advantage goes back to one thing: how simple and efficient it is to post. OfferUp Autos will just make it one step easier.

“There’s plenty of different ways to buy and sell things,” Huzar said. “I think our obsession is that we’re only trying to do one thing: we’re trying to create a friction-less experience.”

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I’m a San Francisco-based staff writer for Forbes with a focus on Uber, the sharing economy, and startups. I previously worked for Business Insider, Gigaom, and Wired. I also spent a year as newspaper designer for Gannet. I’m a native of Atlanta, Georgia and a proud graduat...